Yamauchi No.10 Family Office
Toyo Construction Co.,Ltd. (“Toyo”) (TYO 1890)
June 9, 2023
Yamauchi-No.10 Family Office’s Request to Toyo Shareholders – Please Vote at Toyo Construction’s Annual General Shareholders’ Meeting
Yamauchi-No. 10 Family Office (“YFO”) announced a proposal on June 9, 2023 requesting Toyo shareholders to exercise their voting rights on each agenda item at Toyo’s Annual General Meeting of Shareholders as follows.
Request to Toyo Shareholders – Please Exercise Voting Rights at Toyo Construction’s Annual General Shareholders’ Meeting
[Reference: Rebuild TOYO: Leadership Requirements for Toyo’s New Board]
Toyo announced their proposed director candidates on May 24, 2023. YFO has carefully considered the suitability and the selection process that Toyo has followed for each of its proposed candidates. Based on our review, we hereby request that you, as Toyo shareholders, vote as follows.
YFO believes that Toyo’s board should combine the skill sets of the highly experienced shareholder-proposed candidates with proven track records in fields that will be extremely beneficial for Toyo’s future together with certain of Toyo’s internal director candidates. This combination would best position Toyo’s board to fix Toyo’s broken corporate governance and upgrade its management, and thereby to increase Toyo’s corporate value. For details on the optimal board composition YFO aims to achieve and the corresponding skill matrix for each candidate, please refer to the press release "Rebuild TOYO: Leadership Requirements for Toyo’s New Board" published today.
As we have previously announced, we understand from the truly independent board candidates that we have proposed join Toyo’s board as a shareholder proposal that, if our shareholder proposals are passed and Toyo’s board is rebuilt, the rebuilt Toyo board would run a process (‘market check’) to evaluate all strategic options to maximize shareholder value, including third party proposals and the possibility of remaining a listed company, not only YFO’s acquisition proposal. We believe that voting your Toyo shares as we propose will maximize shareholder value.
We ask all Toyo shareholders to support these efforts to fix Toyo's broken governance, upgrade Toyo’s management, and maximize corporate and shareholder value.
< Company Proposals >
(Proposal No. 1 and 2 are omitted)
Proposal No. 3: Election of Eleven (11) Directors. Vote against, except for those few board candidates relevant to maintaining Toyo’s legacy businesses.
[Those candidates we ask you to consider voting in favor of]
YFO has previously publicly disclosed our support for appointing personnel from within Toyo who have management skills and a clear desire to increase Toyo’s corporate value. We consider the following three (3) candidates to have deep experience and knowledge in Toyo’s core legacy business areas of marine civil engineering and construction. Not only are these candidates potentially important for ensuring Toyo’s business continuity, they also have skill sets that are needed to increase Toyo’s corporate value. Therefore, we request that you vote against proposal no. 3., except to vote in favor of the following three candidates.
| Candidate Number | Name | Current Position |
|---|---|---|
| 1 | Haruhisa Obayashi | Director, Senior Managing Executive Officer, General Manager of the Civil Engineering Division, and the Safety & Environment Department |
| 2 | Hiromi Hirata | Managing Executive Officer, Deputy General Manager of the Civil Engineering Division, and the Offshore Wind Division |
| 4 | Tatsuyoshi Nakamura | Managing Executive Officer, Deputy General Manager of the Civil Engineering Division, and the Offshore Wind Division |
[Candidates we ask you to vote against]
For the reasons set forth below, we request that you exercise your right to vote against the following eight candidates.
| Candidate Number | Name | Why YFO Disagrees |
|---|---|---|
| 3 | Mamoru Satō | See Reason 1. |
| 5 | Atsushi Miyazaki | See Reason 1. |
| 6 | Yasuyuki Fujitani | See Reason 2. |
| 7 | Takashi Narusawa | See Reason 3. |
| 8 | Kazuo Ohtake | See Reason 3. |
| 9 | Akihiko Matsunaga | See Reason 3. |
| 10 | Taizo Nishikawa | See Reason 3. |
| 11 | Akiko Shigemoto | See Reason 3. |
Reason no. 1:
Toyo’s management under the current president has been complicit in inappropriate processes that ran counter to shareholder interests in their response to YFO’s acquisition proposal. We fear that these directors would operate and make decisions under the powerful influence of the current representative directors who are staying on as soudanyaku and komon, respectively. We understand these two representative directors are to retain power to control management without being accountable to shareholders or subject to a vote.
We note also that these directors do not possess qualities that Toyo needs to enhance Toyo’s corporate value or maximize shareholder value.
Reason no. 2:
Since his appointment last year, Yasuyuki Fujitani rubber-stamped the inappropriate processes Toyo’s management took in response to YFO’s acquisition proposal and has failed to supervise management as an outside director.
Reason no. 3:
Each candidate was selected by the Nomination & Compensation Committee. This committee consists of the two representative directors who disregarded shareholder interests and three outside directors who failed in their duties of management oversight and allowed inappropriate processes to persist in response to YFO’s acquisition proposal. These are the same representative directors who this committee announced are to retain power without a shareholder vote or accountability as soudanyaku and komon. We cannot expect proper management oversight from a truly independent perspective from the committee which led such a problematic process.
The shareholder-proposed director candidates have better skill sets in both experience and qualifications to oversee management.
Proposal No. 4: Election of Two (2) Audit & Supervisory Board Members. Please vote against.
Proposal No. 5: Revision of the Amount of Compensation for Directors. Please vote against.
(Proposal No. 6 is omitted)
< Shareholder Proposals >
Please vote to elect the nine shareholder proposed candidates for the board and one statutory auditor to enable Toyo to run a fair review processes to maximize corporate value and shareholder value for all shareholders. We understand from the truly independent board candidates that, if our shareholder proposals are passed and Toyo’s board is rebuilt, the rebuilt Toyo board would run a process (‘market check’) to evaluate all strategic options to maximize shareholder value, including third party proposals and the possibility of remaining a listed company, not only YFO’s acquisition proposal. YFO’s proposed candidates have the qualities, skills, and experience to independently manage and supervise Toyo and maximize Toyo’s corporate and shareholder value. Please refer to page 5 of "Rebuild TOYO: Leadership Requirements for Toyo’s New Board of Directors" released today for details on the skill set of the shareholder proposed candidates.
In order to maximize corporate and shareholder value, please vote in favor of the following three proposals.
Proposal No. 7: Election of Nine (9) Directors. Please vote in favor of all candidates.
Proposal No. 8: Election of One (1) Audit & Supervisory Board Member. Please vote in favor.
Proposal No. 9: Revision of Compensation for Directors. Please vote in favor.
Note: This document is a request to Toyo’s shareholders to exercise their voting rights regarding the proposals at Toyo’s ordinary general meeting of shareholders and does not constitute a solicitation of a proxy for the exercise of voting rights.
For further information, please contact:
Public Relations Department
PR Agent: Vox Global Japan Co., Ltd.
Tel: +81-3-6204-4337 Tanabe/Kuhara
Email: yfo.inquiry@voxglobalasia.com
Shareholder Contact: Innisfree M&A Incorporated
Tel: +1-412-232-3651 (Shareholder Contact - English)
Tel: +44-7506-004-047, +1-212-750-5833 (Financial Institutions and Institutional Investor Contact - English)